DSCR Loan Calculator: How to Determine Your Investment Property's Financing Potential

Understanding how to calculate your property's Debt Service Coverage Ratio (DSCR) is crucial for securing the best investment property financing. This comprehensive guide will walk you through the calculation process and help you understand what lenders look for in DSCR loan applications.

What is DSCR and Why Does It Matter?

DSCR (Debt Service Coverage Ratio) measures a property's ability to cover its debt payments using the income it generates. The formula is simple: DSCR = Net Operating Income (NOI) ÷ Total Debt Service

Step-by-Step DSCR Calculation

Step 1: Calculate Net Operating Income - Start with gross rental income ($36,000/year) and subtract operating expenses ($12,000/year) = $24,000 NOI

Step 2: Calculate Total Debt Service - Include principal, interest, taxes, and insurance = $20,000/year

Step 3: Calculate DSCR - $24,000 ÷ $20,000 = 1.20 DSCR

DSCR Guidelines

1.25+ = Excellent rates, 1.00-1.24 = Good approval odds, 0.75-0.99 = Higher rates, Below 0.75 = Limited options

Ready for Your DSCR Loan?

Apply With Daly specializes in DSCR loans for Charlotte investors. Contact Ryan Daly at (704) 491-7902 or ryan@applywithdaly.com for expert guidance on your investment property financing.